Citi to sell $7.5 billion of equity units to Abu Dhabi Investment Authority
By Our Corporate Bureau | 27 Nov 2007
New York: Citi has announced that it has reached an agreement to sell equity units, with mandatory conversion into common shares, in a private placement to the Abu Dhabi Investment Authority (ADIA), to the amount of $7.5 billion.
ADIA's aggregate ownership in Citi's common shares, including the conversion of these equity units, will total no more than 4.9 per cent of Citi's total shares outstanding, according to a press release on the company's website.
"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," said Win Bischoff, Citi's acting chief executive officer.
Bischoff had taken over the reigns from the erstwhile CEO Chuck Prince, who stepped down as Citigroup's chairman and chief executive on 4 November. It was on this day that Citi had announced that it would likely write down its portfolios' value by $8 billion to $11 billion in the fourth quarter, chiefly because of exposure to assets tied to sub-prime mortgages, which led to a loss of about $6.5 billion.
"It builds on a series of actions we have taken over the past several months to strengthen our capital base, which have included sales of certain non-strategic assets, the issuance of trust preferred securities, and the previously announced plan to use common stock to purchase 32 per cent of Nikko Cordial in Japan. In addition, ADIA is a significant participant in alternative investments and emerging markets financial services, two areas in which we have major positions and have been expanding.
"This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security," Mr. Bischoff continued.
